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Olea chasing $4 million to process the good oil

WA olive oil producer Olea Australis has gone to the market to raise $4 million in its bid to build a new olive oil processing facility at Dandaragan.

The new operation will enable Olea Australis to process fruit from its Dandaragan grove, lifting production from the current 20,000 litres a year to an expected two million litres when full production is reached in about seven years’ time.

Olea recently launched its Dandaragan Estate brand on the Australian market and has just re-corded its first overseas sales, choosing to launch into the multi-billion dollar olive oil market with a relatively small quantity of 20,000 litres of olive oil.

Olea Australis CEO Geoff Newing said the company chose to penetrate the market by producing a small quantity of oil using high quality olives purchased from one of its director’s groves.

He said it was hoped this would enable Olea Australis to stimulate sufficient export demand for the Dandaragan Estate brand for next year, when the Dandaragan Estate trees were ready for harvesting.

“We produced sufficient oil to commence distribution of smaller quantities into the Australian, UK and European markets with a view to create market demand for 2003,” Mr Newing said.

He said he expected Olea would start to capitalise on its $15 million already spent on the development next year.

“We will be cash flow positive next year,” Mr Newing said.

“The ability we have from an investment point of view is [that] we will very quickly ramp up revenue. Production doesn’t grow by 10 to 15 per cent; it essentially doubles until full production.

“We are going from producing 20,000 litres to two million litres in the space of seven years.”

Mr Newing said that, as was the case in the wine industry, good growth was expected in the US market.

“In Australia we consume one-and-a-half kilograms of olive oil per person per annum. In America they consume half a kilo. America is at the stage that Australia was 10 years ago and we anticipate a similar growth there,” he said.

“If America grew like Australia it would require an extra 300,000 tonnes of olive oil. The current world production is 2.6 million tonnes. That is a 12 to 13 per cent increase in total world production just to satisfy the US.”

Mr Newing said the UK and Japanese markets were also growing by about 12 to 15 per cent.

“The growth in olive oil consumption has been as a food ingredient, using it as a salad dressing, a garnish and for dipping. That has increased the demands for high quality extra virgin olive oil,” he said.

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